Treasury bills, bonds sell more

As of May, state coffers were richer by VND96.704 trillion (US$44.4 billion), equal to the total bond value mobilised for all of 2013, a State Treasury report said. — VNA/VNS Photo Pham Hau

HA NOI (VNS) — Transactions of Treasury bills and Government bonds have risen because of the good liquidity of banks for the second consecutive week. Despite this, positive credit growth in the banking system is out of sight.

As treasury bills are organised as short-term instruments of less than a year, they are different from long-term Government instruments in the market, including Government bonds, Government-guaranteed bonds and municipal bonds.

Treasury bills are open-market instruments issued as book entries and are only available to commercial banks. They are kept in State Bank custodial accounts and help the central bank control liquidity.

Latest statistics quoted by Lao Dong (Labour) newspaper show that about VND30.13 trillion (US$1.4 billion) worth of treasury bills for tenures of 28, 56 and 91 days were issued last week.

Yields were raised from 2.6 to 3 per cent for a 28-day term; from 3.2 to 3.3 per cent for a 56-day term; and from 4 to 4.2 per cent for 91 days.

The pumping and withdrawal of money in the last two weeks indicate that the central bank has taken active control over liquidity, and that commercial banks have abundant sources of capital.

In another development in long-term instruments, about VND4.9 trillion ($223 million) worth of Government bonds was sold last week on the primary market - 98 per cent of the total on offer. Bond yields fell 10-15 percentage points lower to reach 5.65-7.15 per cent a year.

The market moves show that idle money from people and banks is flowing into state coffers instead of being pumped into the economy to serve production and business. An executive officer of Vietcombank said commercial banks had already poured a large sum of money into bills and bonds. He added that credit growth was a key factor in making the decision.

In fact, banks are struggling to increase lending.This is indicated through credit growth of only 1.31 per cent from January to May 23 compared to the target of 12-14 per cent growth by year-end.